No respite for Credit Suisse as investors dump rights in $2.3 billion cash call




 

MILAN (Reuters) -Shares in Credit Suisse tumbled to another lifetime low below 3 Swiss francs on Tuesday as investors dumped rights to subscribe to new shares in the loss-making lender.

The rights offering, which is part of a broader capital raise worth 4 billion francs, is intended to help fund the bank's turnaround plan, an attempt to recover from the biggest crisis in its 166-year history.

By 1036 GMT, Credit Suisse shares fell 2.6% to 2.93 francs as the rights tumbled as much as 27% to as low as 0.105 on their second day of trading on the Swiss exchange.

The offering, which is guaranteed by a group of banks, will raise as much as 2.24 billion Swiss francs ($2.3 billion) and follows a 1.76 billion-franc share placement where Saudi National Bank took a 9.9% shareholding in Credit Suisse.

Shareholders in Switzerland's second-biggest bank have the right to purchase two new shares at 2.52 francs each for every 7 rights they hold by December 8.

Investors fear the cash call might not be enough to stabilise the bank, which said last week it could book a pre-tax loss of up to 1.5 billion francs in the fourth quarter, and revealed that wealthy clients had made hefty withdrawals.

That had led to a big drop in liquidity, breaching some regulatory limits.

Credit Suisse's five-year default swaps, a form of insurance for bondholders, blew out to a new record high of 403 basis points on Tuesday, according to data from S&P Market Intelligence.

($1 = 0.9502 Swiss francs)

($1 = 0.9502 Swiss francs)

(Reporting by Danilo Masoni; Editing by Amanda Cooper)

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